Dynamic pricing can be a double-edged sword. On the one hand, it can allow businesses to best match supply with demand in real-time and provide customers with better deals during off-peak times.
It isn’t a new concept and has been around in industries like airlines and insurance for many years – it can even enhance the customer experience by making pricing more flexible and responsive.
However, the risks are just as real, especially when businesses aren’t transparent about their fluctuating prices – and when demand hugely outstrips supply. The recent Ticketmaster and Oasis controversy perfectly illustrates how dynamic pricing can turn into a PR nightmare.
The Oasis debacle
Fans were shocked when ticket prices for Oasis’s reunion tour skyrocketed, with some tickets doubling from £148 to £355. The issue wasn’t just the price – it was the lack of clear communication and the feeling from customers that they were being swindled.
Ticketmaster’s failure to explain how its dynamic pricing worked left many feeling blindsided. The Competition and Markets Authority has now launched an investigation to assess whether Ticketmaster violated consumer protection laws. Investigators are focusing on whether buyers were given clear and timely information, and if they were pressured into buying tickets at inflated prices within a short timeframe.
The CMA is also investigating whether Ticketmaster misled customers and failed to provide the necessary information at checkout, further fuelling concerns that the process was neither fair nor transparent.
People were frustrated, not just because prices changed dynamically, but because they weren’t clearly informed about how or why this was happening. Suddenly, what was intended to be a useful pricing tool became a point of mistrust.
The importance of transparency and honesty
The lesson here is simple: transparency is crucial. If a business is going to use dynamic pricing, it must make sure that its customers understand exactly what they’re getting into. That means clear, upfront communication about potential price fluctuations, and no ‘buy now or lose out’ pressure that leaves them feeling rushed when selling goods or services with uneven supply and demand.
Businesses must be upfront and clear about how their pricing models work, or risk damaging their reputation. It’s not just about avoiding legal scrutiny; it’s about maintaining trust.
Dynamic pricing can be done successfully, though. Take insurance pricing, for example. Premiums are adjusted based on personal risk profiles, and consumers accept that. Travel companies like trains and airlines also use dynamic pricing to balance supply and demand, and we’ve all learned that booking early tends to get you the best deal.
The key difference? Consumers in those sectors understand the system and don’t feel blindsided.
The big picture
Jeff Bezos famously said: “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” This mindset should be front and centre for any business, especially those considering dynamic pricing.
Ticketmaster’s dynamic pricing model may not be illegal, but the lack of transparency and clear communication caused significant damage. The backlash, government review, and investigation by the European Commission serve as warnings for other businesses.
Dynamic pricing should not be purely a tool for squeezing profits from customers, and businesses using them must explain how prices are set. If businesses push too hard and customers feel exploited, the long-term damage to reputation and customer loyalty will outweigh any short-term gains.
At the end of the day, the real challenge for companies is finding a balance between maximising profits and maintaining trust. If you lose that trust, it’s nearly impossible to get it back. For businesses considering dynamic pricing, the key is to keep customers informed, avoid misleading them, and ensure that the system is fair and transparent. Only then can dynamic pricing truly enhance customer experience rather than erode it.